Financial Regulation

The macroeconomic assessment of the macroeconomic transition costs concludes that the transition to stronger capital and liquidity standards is likely to have a modest impact on aggregate output. If higher requirements are phased in over four years, the assessment estimates that each 1 percentage point increase in banks’ actual ratio of tangible common equity to risk-weighted assets will lead to a decline in the level of GDP relative to its baseline path by about 0.20% after implementation is completed.

The Basel Committee’s assessment of the long-term economic impact finds that there are clear net long-term economic benefits from increasing the minimum capital and liquidity requirements from their current levels in order to raise the safety and soundness of the global banking system.

The new version of the SWIFT anti-terrorist agreement on bank data transfers to the USA was approved by the European Parliament on July 8 th, 2010. MEPs rejected the agreement in its previous form four months ago but since then have negotiated certain safeguards for Europe's citizens and won an undertaking that the EU will start work in the second half of this year on a European data processing system that precludes the need to transfer data in bulk to the USA.

In Toronto the G-20 held its first Summit in its new capacity as the premier forum for our international economic cooperation on Hune 26-27, 2010. The G-20 has agreed on the next steps we should take to ensure a full return to growth with quality jobs, to reform and strengthen financial systems, and to create strong, sustainable and balanced global growth.

In view of the economic and financial development in China and abroad, particularly China’s Balance of Payments (BOP) situation, the People’s Bank of China (PBC) has decided to further reform the RMB exchange rate regime and increase the RMB exchange rate flexibility.

On November 30 th, 2010 The Council of the European Union signed the EU-US Agreement on the processing and transfer of financial messaging data for purposes of the US Terrorist Finance Tracking Programme (TFTP). The agreement has to be approved by the European Parliament. The General Secretariat of the Council provides questions and answers on the agreement.

On november 19 th, Senate Banking Committee Chris Dodd delivered opening remarks as the Committee began debate on his Restoring American Financial Stability Act, a comprehensive bill to reform the US financial system. A summary of the proposal is given. Keywords: Create a Sound Economic Foundation to Grow Jobs, Protect Consumers,Rein in Wall Street, End Too Big to Fail, Prevent Another Financial Crisis.